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FAO/GIEWS - Food Outlook No.2 - May 2002 p.8

FAO/GIEWS - Food Outlook No.2 - May 2002 p.8

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Carryover Stocks

World cereal stocks declining in 2002

World cereal stocks at the close of countries' crop years ending in 2002 are forecast at 566 million tonnes, 56 million tonnes, or 9 percent, below their already reduced opening levels. This latest forecast is lower than reported in February, mostly due to further downward adjustments to carryover estimates in China on the basis of higher feed use and exports. The decrease in cereal stocks in China has been the main factor behind the successive declines in world stocks in recent years.

World wheat stocks, by the close of the seasons ending in 2002, are forecast to reach 206 million tonnes, some 28 million tonnes, or 12 percent, below their opening levels. The bulk of this decrease would occur in China, while lower inventories held by major exporters would account for some 9 million tonnes of the anticipated drop in world stocks. Smaller stocks held by the major exporters would result in the ratio of their aggregate wheat stocks to their total disappearance (the sum of their domestic consumption and exports) falling to about 19 percent, compared to 22 percent in the previous season. This relatively low level would normally be interpreted as a sign of notable deterioration in global food security, except for this season’s unusually large availability in other parts of the world, such as in India and a number of CIS and central and eastern European countries. In India, expanding production levels in recent years have raised domestic supplies to well above domestic consumption requirements, resulting in sharp increases in wheat stocks and exports.

World Carryover Stocks of Cereals

Crop year ending in:
2001 2002
estimate
2003
forecast
  (. . . . million tonnes . . . .)
Wheat 234.5 206.2 188.9
Coarse grains 224.4 208.5 189.3
  of which:
    Maize 183.9 165.7 146.9
    Barley 21.3 20.9 21.1
    Sorghum 5.4 6.5 6.3
    Others 13.8 15.3 15.0
Rice (milled) 164.1 151.8 136.4
TOTAL 622.9 566.5 514.6

Source: FAO

Global coarse grain inventories for crop years ending in 2002 are forecast to reach 208 million tonnes, down 16 million tonnes, or 7 percent, below their opening levels, reflecting sharp drawdowns in China and the United States, the world’s largest producers. In China, despite higher production in 2001, inventories are expected to decline by over 13 million tonnes in order to meet domestic requirements and to allow large maize exports. In the United States, where coarse grain output fell by 12 million tonnes in 2001, this season’s ending stocks are forecast to fall by over 8 million tonnes. Also in Canada, the sharply reduced barley production in 2001 would result in one of the lowest stock levels observed during the last decade. Smaller anticipated stocks in Canada and the United States would drive down the ratio of total major exporters' stocks to their combined disappearance to a relatively low level of only 16.5 percent, down from nearly 18 percent in the previous season. In the EC, rye inventories have been increasing due to higher production and lower exports. At the same time, large imports of feed quality wheat into the Community have continued to undercut demand for domestic maize, leading also to a surplus maize stockpile.

Elsewhere, coarse grain stocks in several countries, including Brazil, Hungary, the Russian Federation and Ukraine, are expected to register a significant increase, despite unexpectedly large exports. By contrast, carryover stocks are forecast to fall among a number of major coarse grain producing countries in Africa, as a result of smaller production, principally among the main producers in southern Africa.

The forecast for world rice inventories at the close of the crop seasons ending in 2002 has been revised upward slightly since the previous report, to nearly 152 million tonnes. The change mostly reflects upward revisions for Myanmar, Pakistan, Thailand, the Dominican Republic, Colombia and the United States, which would more than offset lower estimates for India, following prospects for greater exports by this country than previously anticipated. At 152 million tonnes, the world rice carryover would be about 12 million tonnes less than in

2001 and the smallest since 1996. As in 2001, China should record a sizeable year-to-year contraction, since steady domestic demand for rice, associated with a fall in production, could lead to a drawdown of over 11 million tonnes by the end of the season. A reduction is also likely to be experienced by Brazil, Egypt, Indonesia and Japan. On the other hand, the season is anticipated to end with a larger rice carryovers in Bangladesh, India, the Republic of Korea and the United States. Overall, both importing and exporting countries are likely to face stock reductions by the close of the seasons in 2002.

Early forecasts for 2003 point to another sharp drop in world cereal stocks

Based on FAO’s first forecast for cereal production in 2002 and consumption in 2002/03, world cereal stocks would need to be drawn down further by the close of countries’ crop years in 2003 to 515 million tonnes. This would be 52 million tonnes, or 9 percent, down from their opening level. The bulk of this decline would again be attributed to developments in China, where the overall 2002 cereal output is likely to remain unchanged from the previous season.

In terms of individual cereals, global wheat stocks could decline by around 17 million tonnes, or 8 percent, to 189 million tonnes. Besides a continuing decline in China, inventories in Pakistan could fall to the lowest level in two decades, as the Government continues to promote large exports. By contrast, further expansion in stocks is likely among a number of other major producing countries/regions, mostly on the basis of higher production. Aggregate stocks in major exporters are likely to rise, especially in the EC, where a strong recovery is anticipated for wheat production despite sagging export prospects. India is embracing a near-record wheat harvest this season while surplus stocks are already at exceptionally high levels; in fact, the Government has recently announced that all the new crop wheat would need to be stored in the open because of lack of storage space in state-run warehouses. Across the CIS, wheat production in nearly all major producing countries would again surpass consumption, leading to further increases in an already large wheat stockpile from this season.

The outlook for other major cereals remains uncertain as the current yield and area assumptions are highly tentative given that plantings for 2002/03 crops have not been completed and, in some cases, have yet to begin. Overall, the early outlook for coarse grain stocks points to a decline of about 19 million tonnes, to 189 million tonnes. Smaller inventories are expected in China, as well as in the United States, a number of CEECs, major producing countries in Africa and several countries in Latin America and the Caribbean, including important producers such as Brazil and Mexico. As for rice, current prospects point to a further decline in stocks, to some 136 million tonnes, down 10 percent from their opening levels. The reductions should be widespread, with especially strong declines expected in China, consistent with the policy conducted since 2000, Indonesia, notwithstanding expectations of large imports this year, India and Japan.


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